The futures market : financial markets to protect pork prices : myth or reality ?

First introduced in the USA in 1865 for trading in wheat, futures markets theoretically marke it possible to protect many agricultural commodities against price fluctuations.Futures markets do not trade in physical volumes to buy a given quantity at a given date and at a forward price, and the seller promises to sell that quantity for that price on that same date. Losses on the physical commodities market are normally offset by gains on the futures markets, and vice-versa.In pratice, however, ftures markets are not without constraints (tight management, cashflow) and they do carry risks related to poor attendance, as is the case for pork at the Hanover WTB Commodity Exchange.Wide-ranging training initiatives need to be provided for the producers concerned. Collaborators with advanced speicalist knowledge of these tools, and who can correctly factor in their customers needs, remain an essential requirement. Analysis of the real operations at the existing markets can be further improved.